Business Scenario for Individual Report.

Business Scenario for
Individual Report

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Analysis of sources of short and long term finance.....................................................................1
Evaluation of various investment appraisal techniques and recommending the viability of the
acquisition....................................................................................................................................2
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Investments are the assets which are acquired with the aim of earning profits. It is important
to check the viability of an investment by computing its returns and profits. The main aim of this
report is to build an understanding about the various sources of finance. In this report, a case of
Zylla Limited is considered which is engaged in the business of ferries and provide river crossing
services to its customers. In this report, various long and short term financial sources are
analysed to identify the most suitable source for Zylla limited so that they can invest it in a new
ferry. For this purpose, various investment appraisal techniques are also evaluated.
MAIN BODY
Analysis of sources of short and long term finance
Zylla limited is a small scale organisation which is currently at a growing phase and to
enhance the profitability, this organisation is intending to invest in purchasing of a new ferry.
Purchase of the new ferry will result in funding requirement of long term as well as short term.
Few short term finance sources which can fulfil the working capital requirement of this company
are trade credit, customer’s advances, discounting of bills etc. All these sources are analysed
below:
 Trade credit – This source of finance is related with suppliers in which service providers
can operate by acquiring credit from their trade partners (Chernykh and Theodossiou,
2011). This is a short term credit facility as no supplier will allow Zylla limited to hold
their value money more than a year. This source can be used to maintain the ferry and
spend money on workings of the ferry.
 Customer’s advances – Unlike above mentioned source of finance, this source is related
to customers. Organisations such as Zylla limited can seek advance from their customers
from the services which customers can redeem later this will allow company to have
funds for fulfilling their working capital requirements.
 Discounting of bills – This is another short term finance source which enable company
to provide a bill discounting service to their suppliers. Zylla can use this source by
providing a bill to supplier which can be discounted at a later date from bank.
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